TURF

TURF; Empty Nesters Helping New Nesters

By MOTOKO RICH

Published: June 5, 2003

JOSHUA BEATON, a 27-year-old graduate student, was about to sign a lease on a $1,300 one-bedroom apartment in Brooklyn last summer when his father made him an offer he couldn't refuse.

Mr. Beaton's father, Dr. Howard Beaton, had decided to buy a $315,000 apartment in a new condominium around the corner from his office at New York University Downtown Hospital in Manhattan. Dr. Beaton offered his son a chance to live in it, rent-free, for two years.

Dr. Beaton said he wasn't motivated by largess but by good business sense. In fact, he is about to buy a co-op studio apartment for his 24-year-old daughter Audrey on the Upper West Side.

Dr. Beaton, the chief of surgery at the hospital, said he figured the mortgage payments would be close to what his children would have paid in rent. ''I also thought it was a very good investment,'' he said.

On Valentine's Day, his son moved into the downtown condo. With hardwood floors, 12-foot ceilings and black marble kitchen countertops, it makes him feel ''incredibly lucky,'' he said, sitting beneath a poster for ''The Matrix'' on a lumpy hand-me-down brown couch. ''The alternative was that my dad would give me a certain amount of money, and I would give it to someone else,'' he said. ''This way, the capital is kept inside the family.''

Generous parents have helped with down payments and have even bought homes outright for their children for years. But in recent months, as mortgage rates fell and real estate held its own against a roiling stock market, parents have woken up to new investment potential. ''It was like all of a sudden, everybody knew: buy apartments for your children,'' said Elaine Clayman, the Brown Harris Stevens broker who helped Dr. Beaton find a co-op for his daughter, who is starting graduate school in architecture at Columbia in the fall.

Many parents say they aren't spoiling their offspring; they are making sound financial decisions. ''There is no question: this is not a gift to them of an apartment,'' said Dr. Beaton, who already owns a three-bedroom co-op on the Upper West Side, a house in Connecticut and an apartment in Miami occupied by his in-laws. ''I will need my equity back at some point.''

JoAnne Kennedy, a president of Coldwell Banker Hunt Kennedy, a real estate brokerage company in New York, said her firm has helped at least 15 sets of parents buy apartments for their children this year, double last year's number. ''Families have liquidity, and they just don't know what to do with it,'' she said.

Dan Levitan, a partner at Home Mortgage Acceptance, a broker in New York, estimated that loans to parents buying apartments for their children had risen about 30 percent since last year. Although many co-op buildings refuse to admit buyers whose parents are paying, CitiMortgage, a unit of Citigroup, last year created a type of loan directly aimed at that arrangement, with favorable rates for parents of children who don't have enough income or assets to qualify for a co-op mortgage on their own.

The trend is not limited to New York. The parent-as-backer became a running joke in one Chicago household this spring when Andrew Levy, 31, and Gayle Littleton, 30, were shopping for an investment property and kept referring to ''the investors.'' ''You mean Mom and Dad?'' their real estate agent asked.

The young couple bought a $700,000 brick building in the gentrified Lincoln Square neighborhood and moved into one of its three units in April, renting out the other two. Mr. Levy's parents, Joel and Janet Levy, provided 65 percent of the down payment.

The younger Mr. Levy, a business and legal consultant, and Ms. Littleton, an assistant United States attorney, are using the income from the rental units to cover their monthly mortgage payments. If they sell the building, they will split the proceeds with his parents.

Joel Levy, a 58-year-old technology executive, said he and his wife wanted somewhere besides Wall Street to invest their money. ''It sounds almost greedy,'' he said, ''but we were looking for an investment and they were looking for an investment, and it was a good opportunity.''

Brokers from Boston to San Mateo, Calif., report an increase in similar transactions. One of the country's largest home lenders, Washington Mutual, said that it didn't have specific numbers but that it has seen a definite up-tick in loans taken out by parents or jointly with their children. ''I'd say we're seeing parents helping out across the board,'' said Mike Axelrood, a first vice president of Washington Mutual and the regional sales manager of its Chicago office.

Investing in any real estate these days, of course, is by no means a sure bet. On Monday, a government report showed that the growth in home prices during the first three months of the year had slowed to its smallest rise in five years. ''We're obviously closer to a peak than we were,'' said Karl Case, a professor of economics at Wellesley College, who recently helped his 27-year-old daughter, an adjunct instructor at Brooklyn College, buy a two-bedroom co-op apartment in Park Slope, Brooklyn.

''I don't think it's a terrific investment necessarily,'' he added, ''but it's not a bad place to park your money.''